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You are a professional real estate investor, and you are considering the acquisition of a "distressed property which is on Covina Bank's REO list. The property is available for purchase for $300,000 and you believe that you can take a $240,000 interest-only loan at 9 percent interest requiring monthly payments. You also estimate that the property will require $20,000 total for maintenance, landscaping and renovations during the next year, spread out evenly over the months. Future selling expenses for the property are estimated to equal $10,000. Title search and inspection would cost a total of $2,000 upon the purchase Case 1 If you plan to sell the property 1 year from today, and if you require an 15 annual return (in nominal not effective terms, how much would you need to sell it for? To answer this question you will need to first do the following For PV use For PMT use For Nuse For use CPT 61 62 000 0 0 15 NPV 3466.67 1 9 FV -60 000 2000 41 600 12 1.25 PV 040 3466,67 0.75 95 2000 41 600 16 60 000 07 62000 2 5 2 9 0 Q W E R T Y C S D F G H J K L N C V . N M ge option command Case 2 What will be the required selling price if you sell the house not 1 year, but 2 years from today? Assume you will need to keep paying for the loan, maintenance, landscaping and renovations expenses throughout the additional year. Your answer is #2 : (Pick a number from the table below that corresponds to your answer.) 01 5429,643 02 5429,868 03 5556,698 14 5586,094 #5 5659.89 06 688,003 What will be the required selling price if you sell the house not 1 year, but 2 years from today? This time, unlike Case 2 assume you will need to just keep paying for the loan throughout the additional year. Your answer will be ? Pick a number from the table below that corresponds to your answer.) 1 higher than in Case 2 2 lower than in Case 2 and equal #2v. Pick a number from the table below that corresponds to your answer.) 1 1402473 42 44 3 552254 G Search on $ B 7 7 7 2 9 3 6 8 w E R T Y U 1 0 S D F G H J K L > Z X C V B N M 9 alt option command command option #1 higher than in Case 2 #2 lower than in Case 2 and equal #2 . (Pick a number from the table below that corresponds to your answer.) #1 $402,473 #2 $408,434 #3 $522,404 #4 $553,491 #5 $633,105 #6 $666,268 A Click Submit to complete this assessment. esc G Search or type URL & @ # $ 2 3 & 7 4 5 6 8 Q W E R T T Y

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